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The Indian rupee suffered its biggest fall in about two years, weighed down by importers' demand for dollars at the end of the month.
The rupee fell 0.6% on Friday, hitting a new record low of 85.7437 rupees to the dollar, the biggest single-day decline since February 2023. Concerns over the country's trade deficit and slowing economic growth are also putting pressure on the rupee, along with a weaker dollar globally. strength.
The rupee, one of the world's least volatile currencies, has continued to hit record lows this month as a rebound in the dollar weighs on emerging market currencies. Traders are keeping an eye on the new central bank governor's approach to foreign exchange market intervention, which could further increase currency volatility.
Anindya Banerjee, currency strategist at Kotak Securities, said, “The Reserve Bank of India is allowing the rupee to weaken because it makes no sense to place excessive restrictions on the rupee when the dollar is trending higher globally.'' said. “Year-end demand for dollars from importers, oil marketing companies and foreign investors suddenly made the market one-sided.”
Governor Sanjay Malhotra, who took office this month, inherited a financial system that firmly controls currency fluctuations. Although he has not commented publicly on the rupee, other officials have said in the past that the RBI is not targeting a specific level for the rupee.
(Updates with chart and analyst comments)
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